Under Swiss laws, say Swiss bankers, only if you're not a crook do you have the protection of Swiss secrecy. But critics of the system have yet to be convinced, writes Margaret Studer.
Listen to critics of the Swiss banking system and the impression is that of Mafia bosses, drug barons, Third World dictators, corrupt financial market traders and tax dodgers hiding under an umbrella of secrecy. Listen to the Swiss bankers and they talk about respectable depositors attracted by Swiss discretion, 200 years of skill in managing international assets and political stability. So who's right?
It's true that Swiss banks have had more than their share of notorious customers: in the '70s, it was Wall Street insider traders, in the '80s, it was the Pizza Connection, a drug ring operating out of US pizzerias and the Lebanon Connection, a Lebanese-Turkish drug operation, and in the '90s came news of Italy's corrupt officials using Swiss bank accounts as a hideaway. Claimants are still fighting over who should get funds deposited in Swiss banks by former Philippine president Ferdinand Marcos.
And there were accusations recently that bank secrecy had been used to conceal fortunes deposited by the Nazis. In their defence, however, Swiss bankers point to legitimate new money coming to them from a new generation of safe-haven seekers - for example, Hong Kong investors wary about the Crown colony's return to China. The '90s have also seen plenty of money flow into Switzerland from German investors scared that a single European currency will undermine their wealth.
Switzerland has among the strictest secrecy laws in the world, but they don't necessarily protect the baddies. Traditionally, Swiss bank secrecy has been lifted if an account is tied to a crime under Swiss law. And since the '70s, Switzerland has added a number of new crimes to its penal code. First, insider trading became a criminal offence, then money-laundering and being an associate of organised crime.
If you're not a crook, Swiss bankers are quick to say, you have the full protection of Swiss secrecy. And if a banker in Switzerland breaks secrecy regulations by giving out information on a client to anyone other than investigating authorities with reason to believe a crime has been committed, he or she can face up to a six-month term in prison or a hefty fine. Bank Julius Baer's Hans Baer, an elder statesman of Swiss banking, suggests that private clients greatly appreciate such protection: 'Research shows there is a positive relationship between bank secrecy and an international investor's choice of a financial centre.'
So how does a foreigner open a Swiss bank account? Basically, explains Swiss Bank Corporation spokesman Thomas Staffelbach, 'Opening an account is the same for a foreigner as for a Swiss'. And, contrary to a popular myth, Switzerland does not have anonymous accounts - well, not quite.
You can't open a bank account under any name. Even the names of the owners of Switzerland's numbered accounts are known. The difference is that the numbered account names are made known to only a very small circle at the bank. Banks must know the identity of anyone who opens an account, which usually entails photocopying official documentation, such as a passport in the case of a foreigner. If accounts are opened from abroad, references are required from the banks' representatives offices in the person's country of domicile. And, under a code of conduct followed by member banks of the Swiss Bankers' Association, banks which fail to identify customers can be fined up to 10 million Swiss francs.
The major problem for the international community is still tax evasion.
This is not seen as a crime in Switzerland and therefore no legal assistance is given to other countries in tracking down their delinquents unless fraud is involved. Banks are banned from assisting in tax evasion, but, do the dodging and transfers without assistance and without breaking Swiss laws, and an account in Switzerland will still protect you.